The American Recovery and Reinvestment Act created a federal subsidy for COBRA premium payments of eligible individuals who were involuntarily terminated from employment. The subsidy, which reduced premium payments by 65 percent for up to 15 months, was available for individuals who qualified on or before May 31, 2010. On August 31, 2011, the last remaining eligible individuals will see their 15 months run out and the subsidy end.
Any former employees who wish to maintain COBRA coverage during any remaining COBRA continuation coverage period will now be responsible for the full 100 percent of their premium payments. This shift in the landscape is ripe for confusion. Plan administrators are not required to remind COBRA enrollees of this change, nor are they required to bill enrollees for the increased amount. Yet, not making full payments within the correct time period can result in the cancellation of COBRA coverage. Taken together, there is a strong potential for current COBRA enrollees, unaware of the subsidy termination, to lose COBRA coverage if and when they continue to pay the subsidized amount.
To avoid the complaints and confusion that could result from a COBRA enrollee losing health care coverage, employers are advised to discuss this subsidy termination with their group health insurance carrier or the third-party administrator for their group health plan. Does the carrier or administrator oversee any COBRA enrollees still utilizing the subsidy? Has the carrier or administrator made an effort to notify these individuals of the expiring subsidy? Simple actions, such as a courtesy notice to those COBRA enrollees losing their subsidy, might foreclose future trouble with former employees angry about lapsed coverage, not to mention other potential pitfalls, such as public relations concerns.